Validating a Business Model

Validating a business model is the most crucial part of starting a company. By testing a simple hypotheses countless of hours and resources can be saved. Invest a few minutes to understand this new approach to entrepreneurship, it will change your life.

​For the competition, you should focus on the process and learning your team went through, revealing the dead ends and surprises you discovered along the way. Remember, the goal is identifying and validating the business model hypotheses that are crucial to the success of your business and failing early is a success compared to failing late. Your presentation needs to focus on telling the story of how you tested your hypotheses with customers, sharing the insights you made, and explaining the decisions you made based on those insights. You will manifest this by demonstrating a deep understanding of your customers and revealing the details of how you may have discovered that some of your hypotheses were wrong and how you changed accordingly.

The 3 Key Steps of Successful Business Model Validation

1. Identify and track key business model hypotheses (use a canvas)2. Test your hypotheses with customers (get outside the building)3. Pivot and iterate your business model based on customer interactions until all hypotheses have been validated

Validation Process

Below is a condensed work plan for what a team actually does to validate a business model and have a chance of winning the IBMC.

Find a Problem

Find a big customer problem worth solving and write down all your key hypotheses about the business model to solve this problem. We recommend using a canvas as a scorecard to track your hypotheses and the changes that you make.

Nail the Pain

Get outside the building and interview customers face-to-face to understand the “job” customers are trying to do, their current pain, and how they solve that pain. Pivot when you discover you are wrong.

Nail the Solution

Develop a minimum viable product prototype and get outside the building face-to-face with customers to test your vision of the solution. Pivot when you discover you are wrong. Repeat these tests until you nail the solution.

Nail the Go-to-Market Strategy

Get outside the building to understand the end-to-end customer buying process, the market communication infrastructure, the distribution infrastructure. Identify the leverage points. Pivot.

Nail the BusinessModel

Use the facts discovered to validate the revenue model for the business.

Pivot

Throughout the process learn to change course whenever you discover you are wrong.

Digital Tools

There are also a variety of online tools that can help you track your work digitally. A few of these tools are listed below. While we do not endorse any single tool we do recommend that you use a tool to keep track of your work.